This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: If the marginal propensity to consume is 0.8 and if government spending (G) rises by 50 while ... (Read 45 times)

Alygatorr01285

  • Hero Member
  • *****
  • Posts: 564
on: Jun 30, 2018
If the marginal propensity to consume is 0.8 and if government spending (G) rises by 50 while investment (I) falls by 20, by how much will equilibrium income rise?
 
  a. 12
  b. 10
  c. 30
  d. 120
  e. 150

Question 2

What are the effects of a financial crisis on short-run aggregate supply? How might long-run aggregate supply be affected?
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

livaneabi

  • Sr. Member
  • ****
  • Posts: 328
Reply #1 on: Jun 30, 2018
Answer to Question 1

E

Answer to Question 2

A financial crisis affects short-run aggregate supply by first affecting aggregate demand. The decline in economic activity that results from disruption of credit markets causes output to fall below potential output. The resulting slack in the economy prevents producers from raising prices as much as they otherwise would, so both inflation and expected inflation decline, shifting the SRAS curve down. If the financial sector's ability to channel funds to productive opportunities is not quickly restored, businesses will be unable to utilize resources as efficiently as before; the long-run aggregate supply curve has shifted to the left.


Alygatorr01285

  • Member
  • Posts: 564
Reply 2 on: Jun 30, 2018
Great answer, keep it coming :)

bdobbins

  • Member
  • Posts: 326
Reply 3 on: Yesterday
:D TYSM

« previous next »
 

Did you know?

On average, someone in the United States has a stroke about every 40 seconds. This is about 795,000 people per year.

Did you know?

Nearly all drugs pass into human breast milk. How often a drug is taken influences the amount of drug that will pass into the milk. Medications taken 30 to 60 minutes before breastfeeding are likely to be at peak blood levels when the baby is nursing.

Did you know?

For pediatric patients, intravenous fluids are the most commonly cited products involved in medication errors that are reported to the USP.

Did you know?

Though Candida and Aspergillus species are the most common fungal pathogens causing invasive fungal disease in the immunocompromised, infections due to previously uncommon hyaline and dematiaceous filamentous fungi are occurring more often today. Rare fungal infections, once accurately diagnosed, may require surgical debridement, immunotherapy, and newer antifungals used singly or in combination with older antifungals, on a case-by-case basis.

Did you know?

This year, an estimated 1.4 million Americans will have a new or recurrent heart attack.

In 2009, historian Woody Holton described how Abigail Adams shrewdly invested in the Continental Con In 2009, historian Woody Holton described how Abigail Adams shrewdly invested in the Continental Con
A passenger train crosses Stony Creek Bridge in the Rocky Mountains in 1878. Railroads were importan A passenger train crosses Stony Creek Bridge in the Rocky Mountains in 1878. Railroads were importan
Anxiety rises as needs are not met. Without resolution, anxiety may lead to frustration, and then, ... Anxiety rises as needs are not met. Without resolution, anxiety may lead to frustration, and then, ...
Food Sources of Fiber Adults need to consume about 21 to 38 grams of fiber daily Food Sources of Fiber Adults need to consume about 21 to 38 grams of fiber daily
Marginal Products of Physical and Human Capital Marginal Products of Physical and Human Capital
The constitutional division of Powers Between the National Government and the States The constitutional division of Powers Between the National Government and the States
Video: Secondary Active Transport

For a complete list of videos, visit our video library